I wonder what the current accounting requirement would be as far as setting the price, especially given the price variability even during a single day, and the volatility changes that apply to the options.
OK I am interested in this so I looked into it with the recent docs filed in the Reyes case. It looks like the implication is the FMV CLOSING PRICE of the options on the day the comp committee Approves the grant, closing price.
Fortune has these docs online, from the trial. This doc is some kind of rebuttal where the government claimed Reyes cooked the books all by himself and deceived finance when in SV we know that this is the way its been done for years. One thing is for sure, there is major prosecutorial conduct issues here, I don't know if this is the way all prosecutors act. But this is interesting because it tells how options are supposed to be priced. Rossi is the controller I think.
fortunelegalpad.files.wordpress.com
So let??s look at the whole e-mail. . . . And then he says: ??Re grants, there is no rule
for granting or pricing the options. Options would be granted on the date the comp
committee or board approves the options and price is FMV, fair market value, on
that date. The actual granting of options does not have to take place within any
specific timeline.?? . . . You heard from Mr. Simpson, this is the right way to do it.
Options would be granted on the date the comp committee, Mr. Reyes, approves
the options, and price is the fair market value on that date.
The prosecution tries to defend its arguments by claiming that Bossi never advised
Mr. Reyes that look-backs were permissible. That is a straw man, because the defense never
argued that Bossi had so advised Mr. Reyes.2 Rather, the defense proved that Bossi had advised
the Human Resources department that look-backs within the quarter were permissible. Bossi did
so because he ??thought that it might be allowable to ??look back?? within a fiscal quarter in the
context of the committee of one.?? (7/13/07 Bossi 302, at 1); see 11/29/05 interview at 8 (??BOSSI
did not initially see the look-back as posing any major accounting issues as long as a grant was
made within the quarter.??). |
